Soft Mergers

Building a strategic alliance is a way to expand without exposing your firm to liability. Michael Lehrer explains how it's done.

Mergers and acquisitions are on the rise as the architecture industry consolidates to weather a tough economy. Yet there’s another way to work together without formally tying the knot: a strategic alliance, one in which no money changes hands and firms maintain their identity and independence. The recently announced alliance between Los Angeles’s Co Architects and New York’s FXFowle is an example. And in July 2010, a similar deal was struck between Lehrer Architects, a boutique design studio in L.A., and Westlake Reed Leskosky, a larger multioffice, national firm based in Cleveland. With over a year’s perspective, Michael B. Lehrer, FAIA, 58, president at Lehrer Architects and partner of the alliance’s legal entity, LA WRL Design LLP, speaks to the advantages—and distinct challenges—of building an alliance.

Call a friend. If you want to form a strategic alliance, it’s important to have a relationship with another person that’s based on trust. It doesn’t need to be a decades-long relationship, but it has to be one that is built on a foundation of mutual admiration and respect. “I knew Paul [Westlake, FAIA, managing principal at Westlake Reed Leskosky] since our days together at Harvard GSD [Graduate School of Design] more than 30 years ago,” Lehrer says. “We had always wanted to work together in some way, but a chance meeting in 2007 brought us together again and we started thinking about what we could do.”

Look for a good fit. “You have to share affinities and also have complementary expertise,” Lehrer says. “We are a small, design-driven practice with 16 people, with a strong design culture. We are local and know L.A. I’m not a corporate person. WRL is a national, multidisciplinary firm with a staff of 150, including engineers and performing-arts specialists. Paul understands business and the business of clients, and he sees opportunities in ways that I don’t. It seemed the perfect thing to do, to bring together our local expertise and familiarity and their arts-and-culture experiences.”

Make money. The partnership was forged against the background of the recession, Lehrer recalls. “Our main occupation during this period was to survive, and it forced us to think more creatively,” he says. “Since we both already had a robust body of work in our respective practices, we wanted to leverage that to generate new business and increase revenue. This relationship is about surviving this period and thriving in the next.”

Lawyer up. Lehrer Architects and Westlake Reed Leskosky decided to form a new entity with its own legal status and identity in order to formalize the alliance without any money changing hands. “This gives us more credibility with clients. It says we are more than a joint venture or a one-off. It was psychological,” Lehrer says. “We felt that to be taken seriously we needed a more serious legal setup. It solidified our new, more-complex, and richer identity without giving up our other identities.”

Stay independent. An alliance means that allied firms are not merged: Each maintains its autonomy, offices, and name. Yet the new entity also enables an alliance to talk about collective work and to pitch, pursue, produce, and deliver projects on the basis of combined strengths. One firm has access to another firm’s expertise and multiple perspectives—whether it’s a situation that leads to a job or not. “You are on the same team,” Lehrer says.

Prepare for bumps. Everyone talks about the benefits of an integrated practice and transdisciplinary design, but it is very hard to pull off, Lehrer says. So even if the romance is there, be ready for tensions and cultural differences. There is a reason you have the unique practice you do. An alliance is bound to lead to tensions, so embrace them.

Go the distance. The setup between Lehrer Architects and Westlake Reed Leskosky is conventional. “We go their office and they come to ours,” Lehrer says. “I call or text Paul if I hear about something interesting, and so does he.” Thanks to technology, whether the partners are in the same building or in different cities, their ability to communicate is constant, simultaneous, and seamless. Still, like any other relationship, it is a work in progress—and honesty is key. A job might come along that’s a better fit for one of the individual firms. “One has to be clearheaded and honest with oneself, because if you feel resentment, it is not going to work,” he says.

Take it higher. “Both of us have the practices of our dreams and we didn’t want to give that up,” Lehrer says. “We think the alliance will take us to a whole new level. And if it doesn’t, an alliance means it is not the end of the world, financially speaking. Perhaps it will change into another kind of relationship. That might be a natural evolution, but who knows.”